The Adkins Diet Is Rocking Food-Related Industries What do Whoopi Goldberg, Jennifer Aniston, and Bill Clinton have in common, besides being liberal democrats? Theyre all part of the growing number of Americans who have embraced a low-carbohydrate diet ? the most popular of which are the Atkins Diet and the South Beach Diet.
Whats the thinking behind this new way of eating? Basically, it recognizes that carbs are digested or broken down into sugars, which then circulate in the bloodstream. As sugar levels in the blood rise, so does insulin. Peaks of insulin push the body to store excess sugar as fat.
By cutting carbs, you effectively cut sugar surges and not only store less fat but also start to burn off more of the fat you have. Instead of eating foods rich in carbs such as potatoes and bread, you eat foods high in protein, such as meat, eggs, cheese, and butter.
Dr. Robert C. Atkins did more than anyone else to popularize the idea that dieters could eat fat and lose weight. As millions followed his advice, sales of red meat soared and steakhouses grew in popularity. His book Dr. Atkins New Diet Revolution has sold 15 million copies. Atkins Nutritionals, his consumer food company, reported $100 million in revenues for 2002.
But Atkins faces competition from other popular low-carbohydrate diets that call for less saturated fat. A book on one such plan, The South Beach Diet, came out in April 2003 and has sold more than 5 million copies.
What are the driving forces behind the low-carb trend?
1. Americans are the most overweight population on the planet, and obesity is fast becoming a national health crisis. The Centers for Disease Control and Prevention reported that poor diet and lack of exercise, which killed 400,000 Americans in 2000, may soon overtake tobacco, which killed 435,000 people that year, as the leading preventable cause of death in the U.S. 2. A low-carb diet seems to work. A report published in The New England Journal of Medicine found that, at three months, those on the Atkins diet lost an average of 17.6 pounds, while the conventional dieters lost about 8.3 pounds. After six months, those on the high-fat plan had lost an average of 21.2 pounds, compared to 11.5 pounds lost by those on the normal diet.3. Many people actually enjoy the diet. Its underlying principle of “eat liberally from among a wide selection of protein-rich foods, such as steak,” has a widespread appeal. Never before has a diet featured a bacon-cheeseburger ? without the bun, of course.
How popular is the low-carb lifestyle? According to a February 2004 survey conducted by Marketing Technology Solutions, Inc.,1 70 percent of respondents stated that they have incorporated more lowcarb foods and beverages into their diet over the preceding three months. Some 26 million Americans are on a hard-core low-carb diet right now. And 70 million more limit their carb intake without formally dieting, according to a new poll by Opinion Dynamics Corp.
At fast-food restaurants, low-carb salad orders rose 12 percent over the past year, while consumption of french fries fell 10 percent.
Americans swiftly turned against transfats as bad reports spread, and against carbohydrates once the Atkins Diet gained its current momentum. This dealt a one-two punch to french fries, one of Americans’ longstanding food favorites. French fries have suffered the largest annual decline in sales in 15 years, according to a recent study by the NPD Group, a global sales and marketing consulting firm trusted by food producers, retailers, and restauranteurs. Sales have fallen so far and so fast that potato processors are becoming frantic, as are fast-food chains, where fries accounted for just less than 20 percent of total annual sales.
Counting carbs has become as powerful a factor in the economy as it has in society. Some 586 distinct new low-carb foods and beverages hit the grocery shelves in the first quarter of 2004, up from 633 in all of 2003, and just 339 in 2002. Counting all the product variations, this all adds up to 1,558 low-carb product introductions in just over two years, according to Time magazine.2
The average carb-conscious shopper spends $85 a month on specialty foods. Low-carb-related sales from such consumables as Michelob Ultra beer and books like Dr. Atkins’ New Diet Revolution are expected to hit $30 billion this year, reports LowCarbiz, a trade publication.
Companies whose profits depend on carb consumption are responding to the trend. Anheuser-Busch, which has launched Michelob Ultra and helped publicize that all light beers are relatively low in carbs, spent nearly $1 million for fullpage ads that ran in 31 major newspapers. The ads pointedly attack the claim in Dr. Arthur Agatston’s South Beach Diet that beer is laden with the carb maltose, a sugar.
This month burger chain Hardee’s signed baseball great Mark McGwire, known as Big Mac, to flog its bunless Thickburger. Even McDonald’s is phasing out supersize portions and offering adult Happy Meals that are carb-conscious.
Burger King is launching an Angus steakburger that can come wrapped in lettuce and adorned with low-carb steak sauce. Krispy Kreme says it will unveil a low-sugar ? and therefore lower-carb ? doughnut by year’s end.
What has shaken the food giants into action is surveys like the one from research firm Mintel International showing that three of every five low-carb dieters say they plan to limit carb intake for life. Half the people who tried a low-carb diet in the past 12 months and one in three who tried a low-carb diet more than a year ago are still limiting their carb intake, according to a Morgan Stanley study.3 Says Morgan analyst Bill Pecoriello: “Carb watching should hold pretty much steady long after low-carb diets lose their popularity.”
Another trend impacting the food industry is figuring out and letting consumers know which carbs are carbs for dietary purposes. Most of the products labeled low-carb now list their “net carbs” or “effective carbs” ? that is, total carbohydrates minus fiber and sugar alcohols ? even though the Food and Drug Administration has adopted no definition for those terms. Sugar alcohols such as sorbitol, maltitol and lactitol are carbohydrates that are generally believed to have little impact on blood sugar levels. But there is some evidence to the contrary.
Sorting out the claims is an urgent concern for the agency. “It’s a jungle out there,” said Lester Crawford, acting commissioner. The agency has sent warning letters to some companies but has taken no legal action. Its report on carbohydrates has been delayed but is coming out soon, the agency said.
In the meantime the Agriculture Department, with the help of the FDA, has issued guidelines for the products it regulates ? meat and poultry ? which permit the use of terms such as “carb conscious” and “carb wise,” terms that do not imply a specific level of carbohydrates. The department also allows terms like “net carb,” “effective carb,” and “net impact carbs,” as long as the meaning of the terms is clearly defined.4
In Canada, the government has announced that no low-carb claims will be permitted on food labels and that all must be removed by next year.
The Grocery Manufacturers of America has filed a petition asking the Food and Drug Administration to define carbohydrate claims including “lowcarb,” which the organization says should mean no more than 9 grams of total carbohydrates per serving.
The Center for Science in the Public Interest, a nutrition advocacy group that frequently criticizes the food industry, wants the Food and Drug Administration to prohibit the net carbs claim because the meaning is unclear.
Where is all this headed, and what are the business implications?
First, companies that have not caught on to the low-carb trend, have done so at their peril. Consider Unilver. The success of the Atkins diet caught Unilever by surprise, and made its acquisition of Slimfast look particularly foolish.
Krispy Kreme Doughnuts slashed it earning forecast in May and set a plan to overhaul its operation as its core business gets battered by the popularity of low-carb diets. Shares of the company fell more than 25 percent after the profit warning ? its first since going public four years ago. It also said it will shut down or sell off its Montana Mills Bread Co., an upscale bread and pastry chain it bought last year.
Alternatively, companies that deal in protein are enjoying the benefits of the low-carb trend. Tyson Foods, one of the world’s largest processors and marketers of meat, recently reported a 75 percent surge in net income due largely to increased demand for beef as more consumers turn to protein-rich diets. Sales in the company’s beef segment jumped nearly 25 percent to $3.28 billion, with a 22 percent increase in average sales prices.
The low-carb craze continues to pressure food companies into developing low-carb versions of existing products. For most brands, the goal will be to deliver a product assortment that meets the needs of each consumer niche within a brand’s franchise. Because low-carb products are also purchased by those who described themselves as fit and at the proper weight, advertising themes geared at “lose the weight” might alienate those who could relate to a message of “stay fit.” The right message, media selection, and celebrity endorsements will be critical to continued success.
And also the right taste. Frito-Lay is coming out with low-carb versions of Doritos, Cheetos, and Tostitos, but a spokesman acknowledged that the products “would have an aftertaste because of the soy protein,” said Lynn Markley, a senior vice president for communications at Frito-Lay. “But compared to similar low-carb products, they taste pretty darn good.”
Some scientists and dieters fear that people will respond to the products the same way dieters a decade ago took to no-fat and low- fat foods, gorging with what they thought was impunity, and getting fatter in the process. Calories still count.
David Ludwig, an associate professor at Harvard Medical School and director of the obesity program at Children’s Hospital in Boston, said the products may make people feel a bit more full than “highly refined carbohydrate junk foods, but I don’t recommend them.”
Ludwig added, “If people overeat on these foods, they will not lose weight.”
Arthur Agatston, who created the South Beach diet, is considering his own line of low-carb foods. Low-carb snacks filled with fiber, he said, are much better than high-carb snacks without fat; the former fill you up, the latter make you hungrier.
But he acknowledges that the trend can be overdone. “People may make their whole diet on low-carb processed foods and miss the nutrients from whole food,” he said. “We really want people to have regular meals of whole foods.”
Looking ahead, we offer the following forecasts:
First, the low-carb diet is here to stay. While we expect to see this diet craze to peak in 2005 and then diminish somewhat, there is substantial reason to believe that the current wave of high-protein/low-carbohydrate eating represents a permanent shift in American eating habits that will persist for the next 20 years or more. This is driven by the convergence of at least three demographic and psycho-graphic trends:
1. Obesity has become prevalent despite social norms and medical statistics that make it undesirable. Most people are only heavy because it’s not been easy to be otherwise.2. The aging Baby Boomers who have the spending power and decision-making authority in business and government are becoming increasingly health-conscious as well as comfort-conscious. This diet plays perfectly into the preferences of a generation that wants maximum gain with minimum pain.3. Productivity growth in the agri-business sector has been so dramatic that Americans today pay a smaller share of their incomes for food than people anywhere else in the world at any time in history. Forty years ago, steak was prohibitively expensive for daily consumption in most households; today, cost is not really an issue for most consumers.
Second, the benefits of this “change in lifestyle” will ripple across society and the economy. Lower incidence of obesity will lead to fewer heart attacks and much lower incidents of Type 2 diabetes. The upshot will be an improved quality of life for millions of Americans and a slower escalation in the cost of health care than currently projected.
Third, while some segments of the broader “food industry” such as bakeries and candy makers will suffer longterm decline, meat packers and other makers of high-protein foods will benefit. Those who shift to sugar substitutes and/or whole grain and soy substitutes for processed flours should be able to carve out sustainable niches. Low-carb products that closely mimic the characteristics of high-carb products, like the new sweetener, Splenda,5 will be particularly successful, as people try to get the benefits of the low-carb diet with minimal adaptation. While many of the new low-carb packaged goods will fail, a few are likely to become the dominant products in their respective categories within a few years. The challenge is to perform virtually as well as the high-carb alternative, with the added low-carb benefits.
Fourth, following a low-carb diet will become much easier and almost expected in our society. In the same way that Diet Coke has become the topselling soft drink and low-fat yogurt became the standard in its product category, today’s lowcarb lifestyle will increasingly become the “way things are done,” so people won’t have to go out of their way to make it their norm. This will make it less tempting for people to “backslide” into their old high-carb ways.
References List :
1. For information about Marketing Technology Solutions survey regarding low carbohydrate consumption, visit their website at: www.mateso.com/press/index.html?menunews 2. Time Magazine, May 3, 2004, "The Low-Carb Frenzy," by Daniel Kadlec. ⓒ Copyright 2004 by Time Warner, Inc. All rights reserved. 3. ibid. 4. The Milwaukee Journal Sentinel, May 2, 2004, "Low-Carb Foods Can Add Up," by Marian Burros. ⓒ Copyright 2004 by Journal Communications, Inc. All rights reserved. 5. Reuters, May 2, 2004, "Splenda Takes Sweet Ride on Atkins Coattails," by Deborah Cohen. ⓒ Copyright 2004 by Reuters, Limited. All rights reserved.
